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California Workers Compensation
Reducing CostApril 14, 2004
Women in HR
Janice Berthold, CLU, ChFC, [email protected]
(408) 626-6000
Causes of Inappropriate Claims
• Medical• Indemnity• Mistakes• Lack of Understanding• Resentment• Unscrupulous Service
Providers
Indirect Costs – The Rest of the Iceberg
• Work disruption• Residual slowdowns• Temporary help or overtime• Hiring and training costs• Ruined products
Benefits of Early Return-to-Work
• Prevention of wage loss• Faster recuperation• Positive social
reintegration• Avoidance of “disability
syndrome”• Improved self-worth
Climbing Costs• The average medical cost per claim in California was
23% higher than the median state’s average medical cost per claim.
• Workers compensation claims payments to chiropractors in California averaged $2,066, 148% higher than the median states studied ($833) and 70% higher than Illinois, the next highest state ($1,215).
• More than 28% of the claims in California involved therapists, compared with 20% in the median state.
• Six out of eight workers comp back surgeries are unnecessary.
Reasons for the Increase
• Cost shifting from non-occupational health care to workers compensation
• More sophisticated and expensive medical technologies
• Added costs associated with medical case management
• Over-utilization of medical services
Combined Loss & Expense Ratios As of 12/31/02
20%18%
89%
20%20%
101%
21%
21%
111%
22%
24%
125%
22%
21%
134%
14%26%
121%
18%17%
105%
18%17%
88%
0.180.17
81%
0%20%40%60%80%
100%120%140%160%180%
1995 1996 1997 1998 1999 2000 2001 2002 2003
Other Expenses LAE Losses
127%
141%153%
171%177%
161%
140%116%
Marketplace Chaos Ensues
• 26 Carrier insolvencies
• Seven Carriers withdraw from the marketplace
• No new carriers coming into California
• Marketplace contraction, capacity crisis
You Can Reduce Loss Costs
• Develop standards for accident and incident investigation.
• Offer modified duty and return to work.
• Monitor all indemnity claims.
• Consider surveillance.
What Else Reduces Cost?
Complete incident reports showing as much detail as possible with eyewitness accounts if available.
Monitor all treatment and medication to determine if they are appropriate.
Keep continuous communication open between yourself and your Insurer to make sure case reserves are proper.
What Else Reduces Cost? (Cont.)
Assure claims are closed out as quickly as possible.
Question anything that looks like Fraud.
Make sure claims coded to you are in fact yours.
Indicators of Workers Compensation Fraud
• Conflicting history of accident by claimant, hospital, doctor.
• Accident not witnessed OR an overly enthusiastic witness.
• Monday morning/Friday evening accident.• Claimant is difficult to contact by
mail/phone.• Claim filed just prior to job completion.• Claimant not at home during the day.• Minor accident incurs major medical
expenses.
Claims Review
• Look for frequency - will usually require loss control.
• Watch open claims - are they still open?
• Track large reserves - can there be a reduction before Unit Stat Filing?
Who Should Report the Accident?
NOT THE FILE CLERK!
A fully trained employee should have responsibility for reporting
the claims.
Additional Cost Saving Ideas• The Medical Triage System
• The Time Card Release Plan
• The 1-3-5 Plan
• Classification Pro-Action
• The 90-Day Delay Program
Highlights of Work Comp Reform
• Repeals requirement that laws primarily favor the employee
• Requires ER sponsored physician only
• Requires that employment is predominant cause of injury
• Promotes objective medical findings
• Provides independent review of medical treatment disputes